The International Federation of Accountants and the International Integrated Reporting Council have signed a memorandum of understanding to promote cooperation, coordination and alignment in developing an international framework for Integrated Reporting of sustainable business practices.
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The two groups see Integrated Reporting as the language of sustainable business and the means by which companies can communicate how value is created and will be preserved over the short, medium and long term. The information can be used by investors to support their capital allocation decisions. Companies will be able to communicate non-financial information through an “integrated report” about how the organization’s strategy, governance, performance and prospects lead to the creation and preservation of value.
With the MoU, IFAC and the IIRC see opportunities to work more closely together to promote, support and contribute to the realization of their mutual interests.
“There are inherent synergies between the work of IFAC and the IIRC in support of an internationally accepted framework for integrated reporting,” said IFAC CEO Ian Ball in a statement. “Traditional financial reporting alone is no longer enough information for investors and stakeholders. A more complete picture is needed, and the work of the IIRC will help guide organizations to achieve this.”
Commenting on the signing of the MoU, IIRC CEO Paul Druckman added, “The ability of business to measure and communicate what really matters is an increasing demand of investors and other users of corporate information. enables a business to tell its value creation story in a way that gets to the heart of what makes the business tick today and in the future.
“The accountancy profession globally has a vital role to play in providing confidence in the validity of both the narrative and the numbers that businesses must disclose to secure investment and provide transparency,” he added. “This MoU underscores the value that both IFAC and the IIRC place in this continued partnership, and its role in helping to secure an evolution in corporate reporting that supports efficient and productive capital markets, and a more sustainable global economy.”
IFAC represents 167 professional accountancy organizations around the world, while the IIRC’s mission is to create an International Integrated Reporting Framework that provides material information from organizations about their strategy, governance, performance and prospects in a clear, concise and comparable format. The framework aims to include financial, governance, management commentary and sustainability information in corporate reporting. The IIRC hopes to encourage more corporate report preparers to use Integrated Reporting and thereby gain more recognition from both standard-setters and investors. Through signing the new agreement cooperating, IFAC and the IIRC also aim to enhance their respective missions and strategic goals.